I have a few articles on my blog that will help you wrap your head around what is going on and figure out how to solve it. For one thing, your machine DOES have an adjustment for the bobbin tension. They all do.

It's most likely not a problem with the machine, but just something simple like not having the thread seated properly, etc...

If you liked the machine, and don't want to wait, hunt and hope for a cheaper one to cross your path, then I'd say go for it. The FW was, and still is, a very high quality machine - heirloom quality in fact. $250 isn't el-cheapo bargain basement pricing, but if the machine is in good cosmetic and sewing shape, it's seems fair. If your goal is to get one for as little money as possible, then waiting and hunting is the way to go.

As a general rule of thumb, they should be cleaned (de-linting) after every project, and oiled at the bearing points with about every 8 hours of use. However, some machines are NOT meant to be oiled by the end user, but rather to be serviced annually by a sewing tech.

Sears/Kenmore uses the color coding system for it's needles. You can go to the sears website and search through their sewing machine needles to see what the various colors mean. So in that regard, knowing that the machine was meant to be a Kenmore, is helpful to your query.

The manual has illustrations of exactly how the foot should be installed. I suggest comparing what you are doing to what is shown in the manual. The pull down lever should be pulled down behind the little tab on the side of the foot. I bet your iether not pulling it down, or you don't have it behind the foot as shown in the manual.